BP BHEAD INT H

AN ACT Relating to property tax relief; amending RCW 84.52.067; adding new sections to chapter 84.36 RCW; creating new sections; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. It is the intent of this act to provide property tax relief for homeowners whose property taxes are at excessive levels. Rapid increases in home values often have the effect of increasing property taxes to excessive levels without an accompanying increase in a homeowner's ability to pay. This act limits homeowners property taxes based on their ability to pay. This act provides a means to eliminate tremendous surges in property taxes so that families will be able to keep pace and seniors will not be taxed out of their homes.

NEW SECTION. Sec. 2. As used in this section and sections 3 through 5 of this act, except where the context clearly indicates a different meaning:

(1) "Residence" means single-family dwelling unit whether such unit be separate or part of a multiunit dwelling, including the land on which such dwelling stands not to exceed one acre. The term shall also include a share ownership in a cooperative housing association, corporation, or partnership if the person claiming exemption can establish that his or her share represents the specific unit or portion of such structure in which he or she resides. The term shall also include a single-family dwelling situated upon lands the fee of which is vested in the United States or any instrumentality thereof including an Indian tribe or in the state of Washington, and notwithstanding the provisions of RCW 84.04.080 and 84.04.090, such a residence shall be deemed real property.

(2) "Department" means the state department of revenue.

(3) "Combined disposable income" means the disposable income of the person claiming the exemption, plus the disposable income of his or her spouse, and the disposable income of each cotenant occupying the residence for the assessment year, less amounts paid by the person claiming the exemption or his or her spouse during the assessment year for the treatment or care of either person received in the home or in a nursing home.

(4) "Disposable income" means adjusted gross income as defined in the federal internal revenue code, as amended prior to January 1, 1995, or such subsequent date as the director may provide by rule consistent with the purpose of this section, plus all of the following items to the extent they are not included in or have been deducted from adjusted gross income:

(a) Capital gains, other than nonrecognized gain on the sale of a principal residence under section 1034 of the federal internal revenue code, or gain excluded from income under section 121 of the federal internal revenue code to the extent it is reinvested in a new principal residence;

(b) Amounts deducted for loss;

(d) Pension and annuity receipts;

(e) Military pay and benefits other than attendant-care and medical-aid payments;

(f) Veterans benefits other than attendant-care and medical-aid payments;

(g) Federal social security act and railroad retirement benefits;

(h) Dividend receipts; and

(i) Interest received on state and municipal bonds.

(5) "Cotenant" means a person who resides with the person claiming the exemption and who has an ownership interest in the residence.

NEW SECTION. Sec. 3. (1) A person is eligible to receive a partial reduction of regular and special property taxes if the following conditions are met:

(a) The property taxes must have been imposed upon a residence that was owned and occupied by the person claiming the reduction as a principal place of residence as of January 1st of the year for which the reduction is claimed. Confinement of the person to a hospital or nursing home shall not disqualify the claim of reduction if the residence is temporarily unoccupied or if the residence is occupied by a spouse or a person financially dependent on the claimant for support; and

(b) After taking the exemption under RCW 84.36.381 if applicable, the regular and special property taxes owed are in excess of six percent of the household's combined disposable income.

(2) In determining eligibility under this section, income shall be income for the year prior to which the property taxes are due. Persons applying for a reduction under this section must apply by August 30th of each year to qualify for the reduction.

NEW SECTION. Sec. 4. (1) The department shall provide to persons eligible under section 3(1) of this act an amount equal to that portion of regular and special property taxes that is in excess of six percent of the household's combined disposable income.

(2) The maximum allowable reduction for any household under section 3 of this act in 1995 is one thousand five hundred dollars. Thereafter, this reduction base is adjusted annually by the department based on the implicit price deflator for personal consumption expenditures as published by the United States department of commerce.

NEW SECTION. Sec. 5. The property tax reduction fund is created in the state treasury. Moneys in the fund may be spent only after appropriation. Expenditures from the fund may be used only for allowable reductions under section 3 of this act and costs of administering the program. The state treasurer shall credit money into the property tax reduction fund as necessary to provide property tax reductions and pay for administrative costs.

NEW SECTION. Sec. 6. The department of revenue may adopt rules to implement chapter ..., Laws of 1995 (this act).

Sec. 7. RCW 84.52.067 and 1967 ex.s. c 133 s 2 are each amended to read as follows:

All property taxes levied by the state for the support of common schools shall be paid into the general fund or the property tax reduction fund of the state treasury, as provided in RCW 84.56.280.

NEW SECTION. Sec. 8. Sections 2 through 5 of this act are each added to chapter 84.36 RCW.

NEW SECTION. Sec. 9. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately.